For healthy individual market, keep tax rules that spur coverage

The latest version of the tax system overhaul gaining traction in the U.S. Senate includes a provision the nonpartisan Congressional Budget Office (CBO) estimates would result in 13 million fewer Americans with health insurance coverage over the next decade.

Senate Finance Committee Chairman Orrin Hatch, R, Utah, announced modifications to the Tax Cut and Jobs Act that include a move to repeal the tax penalty for Americans who fail to obtain health insurance coverage.

The CBO and the Joint Committee on Taxation have estimated that repealing the individual mandate would raise the number of uninsured people by 4 million in 2019. By 2027, they estimate, 13 million more Americans would lack health insurance coverage if the policy change were to be enacted.

Encouraging people to take responsibility for obtaining health insurance is the most effective method to maximize coverage gains as well as help ensure that healthy people enroll in coverage and stay covered. Sufficient enrollment of healthy people in the market is essential for ensuring that the financial risk of illness and health is spread across the entire individual insurance marketplace. Without a mandate, more healthy people are likely to forego health insurance coverage, based on previous experience.

In a joint letter, the AMA and other major health industry stakeholders—the American Academy of Family Physicians, American Hospital Association, Federation of American Hospitals, Blue Cross Blue Shield Association, and America’s Health Insurance Plans—urged Congressional leaders “to maintain the individual mandate unless and until Congress can enact a package of reforms to adequately assure a balanced risk pool and prevent extraordinary premium increases.”

“Broad and sustained enrollment contributes to affordable coverage as costs are shared across a larger pool of individuals,” the letter says. “Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely.”

The individual mandate is “one of the primary incentives” individuals have to enroll in coverage under the current law, the letter says. Scrapping the mandate would, by itself, likely lead to much higher premiums which would, in turns, raise the number of Americans without health coverage.

“There will be serious consequences if Congress simply repeals the mandate while leaving the insurance reforms in place,” the joint letter concludes. “Let’s work together on solutions that deliver the access, care and coverage that the American people deserve.”